B-143046, JUN. 23, 1960

B-143046, JUN. 23, 1960

TO HONORABLE FRANKLIN FLOETE, ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO A LETTER DATED MAY 27, 1960, WITH ENCLOSURES, FROM THE ACTING ADMINISTRATOR REQUESTING A DECISION AS TO THE EXTENT OF LIABILITY OF A DEFAULTING CONTRACTOR UNDER THE CIRCUMSTANCES SET OUT BELOW.

THE PUBLIC BUILDINGS SERVICE, REGION 6, KANSAS CITY, MISSOURI, ISSUED AN INVITATION ON APRIL 2, 1958, FOR CONSTRUCTION OF AN EXTENSION AND ALTERATIONS TO A UNITED STATES POST OFFICE AT ATLANTIC, IOWA. IN RESPONSE THE DENMAN PHILLIPS CONSTRUCTION COMPANY SUBMITTED A BID OFFERING TO PERFORM THE WORK FOR THE LUMP SUM OF $128,878. THE BID OF THE COMPANY WAS ACCOMPANIED BY A BID BOND IN THE AMOUNT OF TWO PERCENT OF ITS BID PRICE.

IT IS REPORTED THAT SINCE THE BID OF THE DENMAN PHILLIPS CONSTRUCTION COMPANY WAS $26,216 LESS THAN THE AMOUNT OF THE NEXT LOWEST BID ON THE PROJECT, AND $37,122 BELOW THE AMOUNT OF THE GOVERNMENT'S ESTIMATE FOR THE WORK, THE COMPANY WAS REQUESTED BY LETTER DATED JUNE 17, 1958, TO VERIFY ITS BID PRICE AND TO FURNISH ITS ESTIMATE SHEETS FOR THE PROJECT. REPLY, MR. DENMAN PHILLIPS ADVISED BY TELEPHONE ON JUNE 20, 1958, THAT HIS BID WAS COMPLETE EXCEPT FOR WOODWORK WHICH HE HAD LEFT OUT. IN REGARD TO THE OMISSION OF THE WOODWORK FROM HIS BID PRICE, MR. PHILLIPS STATED "IT WAS AN ERROR BUT IF IT CAN-T BE TAKEN CARE OF, I WILL TAKE IT AS IT IS AND DO A GOOD JOB ON IT.'

IN A LETTER DATED JUNE 27, 1958, IN WHICH REFERENCE WAS MADE TO MR. PHILLIPS' VISIT TO THE CONTRACTING OFFICE, THE COMPANY WAS REQUESTED TO ADVISE WHETHER IT FULLY UNDERSTOOD THE SPECIFICATIONS AND WHETHER ITS PROPOSAL COVERED ALL OF THE REQUIREMENTS OF THE PROJECT. THE COMPANY WAS ALSO REQUESTED TO ADVISE WHETHER IT DESIRED TO WITHDRAW ITS BID BY CLAIMING ERROR OR WHETHER IT WOULD STAND BY ITS BID AND COMPLY WITH ALL THE REQUIREMENTS OF THE SPECIFICATIONS. ON JUNE 30, 1958, MR. PHILLIPS ADVISED THE CONTRACTING OFFICE BY LETTER THAT HE DID NOT WISH TO WITHDRAW HIS BID AND THAT HE WOULD COMPLY WITH ALL SPECIFICATION REQUIREMENTS. JULY 15, 1958, THE BID OF THE DENMAN PHILLIPS CONSTRUCTION COMPANY WAS ACCEPTED AND THE COMPANY WAS REQUESTED TO EXECUTE THE NECESSARY CONTRACT PAPERS. IT APPEARS THAT SUBSEQUENTLY THE DENMAN PHILLIPS CONSTRUCTION COMPANY WAS UNABLE TO OBTAIN THE REQUIRED PAYMENT AND PERFORMANCE BONDS IN SUPPORT OF THE CONTRACT COVERING THE WORK AT THE ATLANTIC, IOWA, POST OFFICE--- ALTHOUGH IT APPARENTLY HAD NO DIFFICULTY IN OBTAINING SUCH BONDS FOR A SIMILAR CONTRACT FOR THE WORK AT THE IOWA FALLS, IOWA, POST OFFICE, WHICH CONTRACT WAS AWARDED DURING THE SAME PERIOD--- AND THAT THE COMPANY WAS ULTIMATELY DECLARED IN DEFAULT ON SEPTEMBER 15, 1958. UPON READVERTISEMENT, AN AWARD WAS MADE TO THE R AND P CONSTRUCTION COMPANY FOR THE PROJECT IN THE AMOUNT OF $145,000--- $16,122 HIGHER THAN THE AMOUNT OF THE ORIGINAL AWARD TO THE DENMAN PHILLIPS CONSTRUCTION COMPANY. IT IS REPORTED THAT THE R AND P CONSTRUCTION COMPANY CONSISTS OF MR. JOHN ROOFF AND MR. DENMAN PHILLIPS, THE LATTER BEING THE SAME INDIVIDUAL CONCERNED WITH THE ORIGINAL BID.

IT IS REPORTED THAT DURING THE PERIOD OF TIME INVOLVED ABOVE, THE DENMAN PHILLIPS CONSTRUCTION COMPANY HAD BEEN AWARDED A SEPARATE CONTRACT TO PERFORM CONSTRUCTION OF A MAILING PLATFORM, ETC., AT THE IOWA FALLS, IOWA, POST OFFICE, PROJECT NO. GS-06B-5628; AND THAT ON FEBRUARY 11, 1960, THE REGIONAL COMPTROLLER WAS REQUESTED TO WITHHOLD PAYMENTS IN THE SUM OF $16,122, WHICH WOULD BECOME DUE THE DENMAN PHILLIPS CONSTRUCTION COMPANY UNDER CONTRACT NO. GS-06B-5628, UNTIL THE QUESTION OF RESPONSIBILITY FOR POSSIBLE EXCESS COSTS BY REASON OF MR. PHILLIPS' DEFAULT ON CONTRACT NO. GS-06B-4930 COVERING THE WORK AT THE ATLANTIC, IOWA, POST OFFICE HAD BEEN RESOLVED.

IN A LETTER DATED FEBRUARY 26, 1960, MR. PHILLIPS, THROUGH HIS ATTORNEY, REQUESTED A RELEASE OF THE FUNDS BEING WITHHELD. IN SUPPORT OF SUCH REQUEST, THE CONTENTION IS ADVANCED THAT MR. PHILLIPS WAS AT ALL TIMES DURING THE PERIOD IN QUESTION READY, WILLING, AND ABLE TO PERFORM THE CONTRACT FOR THE PROJECT AT ATLANTIC, IOWA, ON WHICH HE HAD SUBMITTED HIS BID; THAT HE HAD MADE ARRANGEMENTS TO HAVE THE SUBCONTRACTORS BONDED; THAT AN EFFORT TO SECURE A PERFORMANCE BOND WAS MADE BY HIM FAR IN EXCESS OF WHAT WOULD BE ANTICIPATED OR EVEN EXPECTED BY REASONABLE MEN; AND THAT MR. PHILLIPS MET THE INCREASINGLY STIFFER TERMS LAID DOWN BY THE BONDING COMPANY FOUR TIMES AND YET WAS REFUSED A PERFORMANCE BOND FOR THIS PROJECT.

IT IS APPARENT FROM THE RECORD THAT MR. PHILLIPS INSISTED UPON THE AWARD BEING MADE TO HIM ALTHOUGH HE WAS GRANTED THE OPPORTUNITY OF WITHDRAWING HIS BID ON THE PROJECT BECAUSE OF THE ERROR THEREIN. UNDER THE CIRCUMSTANCES, WE DO NOT FEEL THAT WE WOULD BE JUSTIFIED IN HOLDING THAT ACCEPTANCE OF THE BID WAS NOT EFFECTIVE TO CREATE A BINDING CONTRACT.

HOWEVER, THE MATERIAL FACTS ARE SO NEARLY IDENTICAL TO THOSE PRESENTED IN THE CASE OF WINTERS V. UNITED STATES, 114 C.CLS. 394, 84 F.SUPP. 756 (CERTIORARI DENIED 338 U.S. 903), THAT WE CAN HAVE NO DOUBT THAT THE COURT OF CLAIMS WOULD ALLOW THE CONTRACTOR TO RECOVER ANY EXCESS COSTS WHICH MIGHT BE COLLECTED FROM THE DENMAN PHILLIPS CONSTRUCTION COMPANY. THEREFORE CONCLUDE THAT THE FORFEITURE OF THE AMOUNT OF THE BID BOND, NAMELY, $2,577.56, MAY BE CONSIDERED AS FULLY DISCHARGING THE CONTRACTOR'S LIABILITY IN THE MATTER.